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Buying a car after completing a Chapter 7 is definitely possible and not uncommon.

If you’re able to save up to buy a used vehicle, or you have friends or family member who can give you a loan or hand you the money, you can get a car whenever you want.

Just remember that if the money you’re using is the property of the bankruptcy estate that you protected with an exemption, it’s best to run this by your bankruptcy trustee first. You need to make sure they are ok with it.

Auto financing after bankruptcy discharge

Getting a car loan after Chapter 7 vs. Chapter 13 bankruptcy

There are two kinds of bankruptcy that one can file as an individual: Chapter 7 and Chapter 13.

With a Chapter 7 bankruptcy, some of your debts may be discharged, and some of your possessions and property might be liquidated so they can repay outstanding debts. Chapter 7 can take about 80 to 130 days to complete, from the initial filing to the discharge of debt. They might also stay on your credit reports for up to 10 years.

A Chapter 13 bankruptcy,

Is known as a wage earner’s plan. With this you make a plan to repay all or part of your debt within three to five years. This plan, which must be approved by a court, usually involves you paying a fixed amount to a trustee on a regular basis.

A bankruptcy can be bad news for your credit scores, but it is still possible to get approved for a car loan.


Getting the right auto loan for your finances

Right after your bankruptcy, most lenders won’t even consider lending you money to buy a car. But just because lenders are wary of you, it doesn’t mean that you can’t get financing anywhere.

What you need to do is to look into options that are specifically tailored to people in your situation.

Here are some ideas:

If you are a standing customer at a bank or a credit union, then you may be able to get financing options directly from them. They will probably be more willing to work with you, since your accounts are already with them.

Check out auto lending companies that specialize in working with customers who have bad credit. These companies might be willing to take more of a risk. Because of the heightened risk, they may charge you more to loan. But even a “bad credit auto loan” can be a deal worthwhile, as long as it matches your budget.

Swap leasing. This is basically where you take on someone else’s lease and take over the payments from them. You will pay what’s left on the auto and they get out of the loan, so it’s a win win. Make sure to read all the terms and have the vehicle checked out prior to the exchange to ensure you’re not getting stuck with a lemon. That kind of lemon won’t make a good lemonade.


Whatever your situation is, we urge you not to give up. Just remember to not loan more money than you can handle on your current budget. There are some possibilities even after filing for bankruptcy, but they might be more costly because of the heightened risk.

We wish you luck on getting auto financing after bankruptcy discharge.


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